DISCONTINUED OPERATIONS
 3 Months Ended
Mar. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
NOTE B – DISCONTINUED OPERATIONS
 
During the year ended December 31, 2013, we decided to exit certain businesses and related products that are not core to our future business plans. These non-core businesses include BNI Solutions, Inc. (BNI), Digilog, Inc. and DCX Systems, Inc. These businesses were previously reported in our consolidated financial statements as a separate segment, “Other Services”. The related products and services include video conferencing hardware and installation of telecommunications equipment, all of which are unrelated to our core M2M communication products and services. We anticipate the disposal of the discontinued operations to be completed by June 30, 2014, one year from the initial classification as discontinued operations.
 
All assets and liabilities of the discontinued operations have been reclassified into two line items, assets and liabilities of discontinued operations, and classified as current in the accompanying condensed consolidated balance sheets. All revenues and expenses of the discontinued operations have been reclassified and presented in the accompanying condensed consolidated statements of income and comprehensive income (loss) as loss from discontinued operations, net of income taxes, after income from continuing operations, net of income taxes and before net income. Similarly, all cash flows of the discontinued operations have been reclassified and presented in the accompanying condensed consolidated statements of cash flows as cash flows from discontinued operations.
 
The following table presents the financial results of the discontinued operations for the three months ended March 31, 2014 and 2013 (in thousands):
       
   
Three Months Ended
  
   
March 31,
  
   
2014
     2013  
 Net sales:
  
 
    
 
  
 Subscription and support revenues
   $ 79     $ 265  
 Embedded devices and hardware
     24       29  
 Total net sales
     103       294  
 Cost of sales, exclusive of depreciation and amortization shown below:
                
 Subscription and support revenue
     59       105  
 Embedded devices and hardware
     39       99  
 Gross profit
     5       90  
 Operating expenses:
                
 Sales and marketing
     30       33  
 General and administrative
     31       47  
 Engineering and development
     23       23  
 Depreciation and amortization
     1       4  
 Operating loss
     (80 )     (17 )
 Income tax benefit
     24     -  
 Loss from discontinued operations, net of income taxes
   $ (56 )     (17 )
 
The following table summarizes the assets and liabilities reported as discontinued operations for the periods presented (in thousands):
             
   
March 31,
    
December 31,
  
   
2014
    
2013
  
ASSETS
            
CURRENT ASSETS
            
Accounts receivable, less allowance for doubtful accounts of $600 and $600
   $ 121     $ 253  
Inventory, net of reserve for obsolescence of $30 and $30
     123       122  
Prepaid expenses and other current assets
     177       164  
TOTAL CURRENT ASSETS
     421       539  
Property and equipment, net
     8       9  
Other assets
     316       292  
TOTAL ASSETS OF DISCONTINUED OPERATIONS
   $ 745     $ 840  
                 
LIABILITIES
                
CURRENT LIABILITIES
                
Accounts payable
   $ 21     $ 10  
Accrued expenses and other current liabilities
     176       171  
Deferred revenues
     -       26  
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS
   $ 197     $ 207  
 
The carrying value of BNI goodwill was reevaluated for impairment in conjunction with our decision to exit these non-core businesses. We will not be pursuing new sales of BNI products and services and do not anticipate significant recurring sales to existing customers. These qualitative factors were indicators that it was more likely than not that the fair value of the BNI reporting unit was less than its carrying amount, including goodwill. We estimated the fair value of the reporting unit using a discounted cash flow model, resulting in the estimated fair value being less than carrying value of the reporting unit. To measure the amount of any impairment, we determined the implied fair value of goodwill in the same manner as if we were acquiring the reporting unit in a business combination. Specifically, we allocated the fair value of the reporting unit to all of the assets and liabilities of that unit, including any unrecognized intangible assets, in a hypothetical calculation. Based on this calculation, we determined that the associated goodwill was fully impaired as of June 30, 2013.